Valeant shares slide on news of probe by U.S. SEC

Shares in Valeant Pharmaceuticals International Inc fell as much as 21 percent on Monday after the drugmaker revealed that it was under investigation by the U.S. Securities and Exchange Commission.

"Valeant confirms that it has several ongoing investigations, including investigations by the U.S. Attorney’s Offices for Massachusetts and the Southern District of New York, the SEC, and Congress," said Laurie Little, a Valeant spokeswoman.

She said the company confirmed that it "received a subpoena from the SEC in the fourth quarter of 2015 and, in the normal course, would have included this disclosure in its 2015 10-K. We do not have further detail to provide at this time."

The company's U.S.-traded shares fell 18.4 percent to close at $65.80 per share.

The SEC probe is separate from an existing investigation into a company purchased last year by Valeant, Salix Pharmaceuticals Ltd, according to a person familiar with the matter.

News of the probe came a day after the Canadian company canceled the release of fourth-quarter earnings, withdrew 2016 financial guidance and said its chief executive had returned from medical leave.

Valeant then attempted to hold a conference call with sell side analysts but later backed out after news of the call was leaked to members of the press, according to people familiar with the matter.

News that the call had been scheduled was first reported by Bloomberg. The cancellation was first reported by CNBC.

Valeant is still holding one-on-one conversations with sell-side analysts and major investors, the people said.

The company has told a number of large investors that it is optimistic about its 2016 financial guidance, according to people familiar with the matter.

It said that it withdrew guidance as a precautionary measure and that investors should not assume that the updated guidance will be significantly lower than what was previously announced, the people said.

Valeant does not expect to file the annual report on its 10-K within the 15-day extension period since it has not yet determined if any restatements are required, the company said in a filing. (1.usa.gov/1Tj2tmX)

In December, Valeant provided 2016 adjusted earnings guidance of between $13.25 and $13.75 per share.

"At this point, investor anxiety is primarily focused on the upcoming earnings report and 10-K," said Umer Raffat, an equity analyst at Evercore. "They just want to be absolutely sure that it won't contain any more major bad news."

The stock has been see-sawing for the past month, often gaining or losing 5 percent or more as speculation has swirled about its future.

The timing of CEO Pearson's return from severe pneumonia had been unknown, and there was speculation on Wall Street on whether he would return at all.

The full outcome of its board investigation into the relationship with pharmacy Philidor RX Services, now terminated, remained unknown.

Investors have questioned how the company will regain sales of many dermatological products that Philidor sold, and do not know the terms of a new distribution agreement with Walgreens Boots Alliance Inc.

Last week, the company said it would restate earnings to reflect preliminary findings from the board review, adding that it should have accounted for $58 million of revenue later than it did.

Moody's Investors Service placed the ratings of Valeant under review for downgrade, reflecting concerns that the company's operating performance is weaker than its expectations. (bit.ly/1T4m6Pl)

(Reporting by Carl O'Donnell in New York and Ankur Banerjee in Bengaluru; additional reporting by Caroline Humer in New York; Editing by Jeffrey Benkoe, Maju Samuel David Gregorio and Sunil Nair)

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